Financing Durable Assets

Find donors to fund durable assets that enable CSA practices / increase productivity. Attach an NFT to this as a donor engagement mechanism. 

There is equipment that can deliver significant farmer impact in terms of productivity, climate resilience (and even mitigation), reducing losses, increased realization through value addition, etc.

A farmer group might be a logical aggregation point to take ownership of equipment themselves or could generate sufficient local demand from across its members to incentivize a local service provider to start a service business around such equipment.

Farmer groups would create a compelling member value prop by unlocking access to this equipment at discounted rates

There are existing programs that subsidize the cost of such equipment like India’s Agri Infra Fund (reference) and if we pooled a bunch of purchases, this could be a compelling product for donors to support given the potential impact. Funding could be combination of both things (ie, apply for the Agri-infra subsidy and augment w private donation which could come in sooner)

Imagine a flow somewhat along these lines:

• Farmer groups post their equipment requirements

• DG helps aggregate requirements, packages this up into a pitch for donors (and we may even fund a portion of it depending on the size). Could imagine a crowdfunding sort of interface over-time

• The fundraise would cover [75%] of the cost of acquisition (bc need farmer group to have some skin in the game) along with [50%] of expected operating / service costs for the next 3 years at which point farmer group needs to maintain on their own

• Target individual “retail” donors and a couple innovative philanthropies as anchors

• Each piece of equipment has an NFT which is a digital twin and usage / impact metrics are attached to the NFT. This gives the donors something tangible in return for their contribution.

  • This might create a totally new and interesting fundraising channel

  • Conceptually, I think an NFT creates a cool separation btwn the physical asset, which is valuable to the farmers, and information about the asset (eg, the NFT) which is valuable to other stakeholders

  • The NFT will contain info about the physical asset like usage which could be translated to impact metrics. What this could do is unlock a trading market for the NFT where investors/donors pay up as the NFT / physical asset has more utilization (and the farmer group could attach other intangible stuff to the NFT to make it more compelling)

  • Farmer groups could participate in this upside via a smart contract that gives them a portion of the increase in value upon every trade; this creates incentive to share more data which is captured in the NFT

• Also becomes a hook for digitization as continued usage and reporting is required to unlock future disbursements

• Over-time this could start to look like a decentralized financing marketplace where farmers can avail access to capital for value-creating assets from a global community; could even open up to debt/blended finance rather than only grants to expand the pool of available capital

Often, the barrier to using mechanization is not just access to equipment but service provision (running the equipment, maintenance, etc.). There is an interesting livelihood and training angle that DG can lean into here.

Some equipment to consider by category. To reduce complexity, maybe start with a couple high impact products with high demand, high cost but low complexity from an operations/servicing perspective and with high productivity and climate benefits as I think that combo would sell well to donors:

• Equipment required for implementing climate smart agriculture (eg, Zero tillage machines / happy seeders) is an interesting theme bc the NFT might also track estimated tons of GHG emissions avoided which could be further monetized

  • Sustainable Agriculture Mechanization (SAM) is climate-smart and environmentally benign and essentially means no-till conservation agriculture, which requires specific mechanization inputs. Principally, these are seeders and planters capable of penetrating soil surface vegetative cover to deposit seed and fertilizer at the required depth and spacing; and equipment for management of cover crops and weeds. Mechanization is required not only for crop production, but also for processing and along the entire value chain. Mechanization inputs are usually expensive and so specialist service provision will be the indicated way forward. This will need collaboration from both the private and public sectors and will involve public-private partnerships to be developed in one form or another.

This chapter encapsules overall mechanization practices and the potential of some of the frontier farm machinery used in the various farm operations right from seedbed preparation to threshing and processing through enhanced input use efciency for attaining climate-smart agriculture. Also, it discusses the possible strategies to increase climate-smart farm mechanization in the area of agricultural production system in every possible way.

Infrastructure and technologies include elevated platforms to house photovoltaic (PV) panels on top of agricultural lands to generate solar power. These platforms are also known to facilitate better yields in crops which prefer shade.

Technologies such as sprinkler and drip irrigation are key infrastructure that promote more crops per drop of water

Cold chain: Storage for horticulture. Reduces wastage and potentially helps to avoid distressed selling

Multi-crop Threshers. See this presentation as a reference.

Processing equipment for value addition (rice, pulses, cashew as we heard with Jattu etc.)

• Stuff related to drying / managing moisture levels / storage like Drycards, Mechanical dryers, hermetic bags

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